Failure to Plan means Problems for Farmers

Published July 27th, 2010 | General |

 

In both of these cases, a failure to have a plan resulted in bad outcomes for farmers who may have actually been wronged.
 
Truth or Liquidated Damages
In 2008, Ohio dairy farmers brought suit against a livestock company that sold them 284 replacement heifers, that were “freemartins.” Freemartins are sterile female cattle, meaning that they are biologically incapable of producing milk. The livestock company claims they sold the heifers as is.

In 2009, in an attempt to find other cattle buyers that were in the same situation as the farmers so as to bolster their contract action against the defendant, the farmers placed an ad in   Midwest agricultural publication looking for“…dairymen who bought replacement heifers that turned out to be freemartins” from the seller.  The livestock company’s attorney claimed the ad was defamatory, but dairy farmers asserted truth as a defense.   The farmers asked for a summary judgment in their favor without trial saying the sales company couldn’t prove the required elements of defmation,malie or damages.
 
The court disagreed with the farmers.  The court noted that the ad implies misconduct in a person’s trade or business is presumed to be defamatory. The court noted that, in the context of defamation, “malice” simply means the lack of legal justification, not a  requirement that the statement be made spitefully or with ill-will.   
On the damages issue, the court noted that the livestock company need not prove that they actually incurred damages due to the ads because the ads were defamatory per se.   
Truth is an absolute defense to a defamation claim, and the farmers claimed that the ads were not defamatory because they were true – the seller knew that they had sold heifers in the past to other parties that turned out to be freemartins.  But, the court required the farmers to also establish that the livestock company was intentionally deceiving other buyers by knowingly or negligently selling freemartins as breedable heifers.   
The case will proceed to trial on the issue of defamation with respect to the ads.
 
Seems like a poor strategy choice on the part of the farmer’s lawyers. A well drafted document request and a private investigator would have accomplished the same information gathering result. Now what was once a dispute about freemartin heifers has blossomed into a defamation case, clearly not what the farmer was looking for when he raised his had to bid on the lot of heifers.
 
 
Investing in your operation.
 
Preserving adequate documentation is critical when a farmer claims crop
damage from the application of weed control chemicals. In this case, lack of a farm operator’s investment in current technology and adequate record keeping hurt him dramatically. 
 
The farmer consulted an ag chemical supplier  to control the weed growth, with the understanding that the farmer would later execute a promissory note and security agreement to finance payment for the chemicals.

The chemical company sprayed the fields twice and on August 1, 2005, the parties executed the promissory note for $108,019, to be paid in full after harvest (by Dec. 1, 2005).  He didn’t pay. The supplier filed an action. The farmer filed a counterclaim claiming that the supplier did not properly spray the crops, resulting in crop loss.

At trial, the farmer testified that the weeds and incorrect chemical application seriously impaired the 2005 crop. However, the farmer could not offer any photographic evidence of the weed problems or evidence of prior and subsequent yield data. The farmer claimed the weed problem caused a crop loss of nearly $40,000. A representative of the supplier disagreed, testifying that he was not aware of a weed problem for quite some time.    It was noted that 2005 was a hot, dry growing season in Iowa and the sandy soil present in some fields land were particularly susceptible to weeds. An agronomy expert testified that it was impossible to determine whether the ineffective weed control was a product of the weather conditions or the chemical application. The trial court   sided with the  supplier stating that the success of herbicides depends on the farmer in cooperation with the applicator, weather conditions, and soil quality. 

The Iowa Court of Appeals affirmed and focused on the lack of evidence of yield loss presented by the farmer. Even though the farmer used GPS in his farming operation, he was unable to present the court with yield data.  The court noted that the party seeking damages has the responsibility and burden of proving those damages.  

 
Investing in your operation to get data on the growing and harvested crop is a must in modern farming. Courts and juries will expect it.  Photographic evidence of the damage would have also been compelling, comparisons to other fields the farmer planted, and a set of good crop scouting reports would have made a much more compelling case. Consider the costs of these events as insurance premiums to prevent greater loss in the event of a major loss.
 
 
Investing in your operation is more than a yield monitor and a crop scout however. It should ideally contain a yearly review with an advisor to consider asset protection, business interruption, business growth, business succession plans, insurance coverage’s and if they are adequate, contracts, estate plans, and tax issues.